The U.S. government’s recent investment in Intel Corp. INTC could lead to unintended inefficiencies in the global semiconductor industry, according to a report by Fitch Ratings.
US Stake In Intel May Create Inefficiencies, Boost Chip Toolmakers
The U.S. government’s equity investment in Intel could potentially create “unintended inefficiencies” for the semiconductor industry, Fitch Ratings warned in a recent report. The report, however, suggested that this might not have a broad negative impact on the credit of chip manufacturers.
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The government’s passive investment in Intel is meant to generate returns for U.S. taxpayers, but it could influence the timing and scale of investments made by Intel and Taiwan Semiconductor Manufacturing Co. Ltd. TSMC.
Greater government involvement in the semiconductor sector may lead to structural inefficiencies, even if Intel’s next-generation process technology remains highly competitive. This may put pressure on top fabless chipmakers such as Nvidia NVDA and AMD AMD.
Taken together, these factors add complexity while favoring chip equipment makers like ASML Holding N.V. ASML and KLA Corporation KLAC, which supply tools and services for technology upgrades and capacity expansion, even though both companies already hold ‘A’-level credit ratings.
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Government Acquiring Stakes In Chip Giants Witness Mixed Reactions
The U.S. government’s investment in Intel is part of a broader trend of increased government involvement in the semiconductor industry. This trend has been driven by a desire to secure domestic supply chains and maintain technological leadership in the face of increasing global competition.
Earlier in August, Sen. Bernie Sanders (I-VT) expressed his support for President Donald Trump‘s plan to convert U.S. grants to chipmakers into government equity in these firms, including a substantial $10.9 billion stake in Intel.
Commerce Secretary Howard Lutnick has been a key proponent of this policy, creating an “investment accelerator” within his department to target major corporations, including Intel. Lutnick also indicated that the government now plans to take a stake in universities that are given federal grants.
These developments suggest a significant shift in the relationship between the U.S. government and the semiconductor industry, with potential implications for the global market.
Benzinga’s Edge Rankings place Intel in the 59th percentile for momentum and the 17th percentile for growth, reflecting its average performance. Check the detailed report here.
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